Fonterra plans to install a 30-megawatt wood biomass boiler to replace a coal boiler at its Waitoa site to lower its carbon footprint.
Work will begin on the new boiler installation later this year, and it is expected to be up and running in November 2023.
The new boiler will reduce the site's annual emissions by 48,000 tonnes of carbon dioxide, the equivalent of taking 20,000 cars off New Zealand's roads, Fonterra said.
Fonterra's head of energy and climate, Linda Mulvihill, said it was another step for the co-op's sustainability ambitions.
"This is the fourth sustainable fuel switching decarbonisation project in as many years for the co-operative, with projects including Te Awamutu and Stirling providing us with insights into the best way forward along with emissions reductions," she said.